BLOG MASH-UP OF THE WEEK

Everyday the blogosphere offers an enormous amount of in-depth analysis on any imaginable topic. The world of macroeconomics and economic forecasting is no exception. To keep themselves updated on the latest information, our in-house team of economists scan the world wide web and gather what they consider the most interesting, appealing, informative or just curious blog posts from experts in the field of global economics. Here’s the list of the Top 4 posts from this week. Check it out!

  1. Antonio Fatas on the Global Economy – Antonio Fatas: ‘Global interest rates and growth (r-g)

    In this blog post, Antonio Fatas explodes data on the US to explain the relationship between interest rate and growth rate. As seen in many macroeconomic models, the difference between the interest rate (r) and growth rate (g) is an important indicator of the sustainability of public finances since lower “r” makes the cost of carrying over debt lower and higher “g” keeps the Debt/GDP ratio under control. However, when looking at the data, Fatas explains that there is no clear correlation between the two variables. In addition, given that interest rates are determined by global conditions, anything could happen when comparing them to growth rates for a given country. However, if the country is big enough to influence global variables then national and global conditions are correlated. – Dirina Mancellari

  2. Costas Lapavitsas – Costas Lapavitsas: ‘Finance’s hold on our everyday life must be broken’

    Little has changed since the outset of the financial crisis in 2008, when politicians questioned the excessive financialization of the economy. Instead of overhauling the system, authorities rescued banks, provided liquidity to the financial system and interest rates were cut to zero. In this post, Costas Lapavitsas defends that the financialised capitalism should be reversed as it fails to promote general welfare and concentrates most of the wealth into fewer hands. That said, Lapavitsas argues that only new regulation can reverse the system, but a broader range of measures should be implemented: the creation of a public financial institution, a certain degree of capital controls as well as new methods of meeting the financial requirements of households and companies.  – Ricard Torné

  3. Econbrowser – James Hamilton : ‘Relaxing restrictions on U.S. exports of oil and natural gas’

    Recent tensions between Russia and Ukraine have sparked a debate regarding the role of the United States as an exporter of oil and natural gas. Many believe that the U.S. should remove restrictions on export mainly on geopolitcal grounds – as it would make a threat of Russian cutting its energy exports less credible. According to James Hamilton, however, relaxing restrictions on U.S. exports of oil and natural gas would be only partially beneficial in terms of geopolitical implications. Instead, Hamilton suggests that there are economic reasons for removing the restrictions: the benefits to domestic producers from allowing oil and gas exports are higher than the losses to the domestic consumers.  – Armando Ciccarelli  

  4. Bruegel Blog – Georg Zachmann: ‘The cost of escalating sanctions on Russia over Ukraine and Crimea

    Following the referendum in Crimea, the United States and the European Union responded by imposing sanctions on Russia. Georg Zachmann states in a recent post in Brussels-based Bruegel think tank that so far, 21 Russian and Ukrainian officials, allegedly responsible for the sovereignty transgressions, have been slapped with asset freezes and travel bans. Today, 20 March, EU leaders met again to discuss possible additional sanctions. Moreover, Zachmann points out that Sanctions and retaliation are obviously a negative sum game. If countries stop their cooperation in certain areas, both sides lose. Furthermore, he said,  the heterogeneity of EU member states’ interests (where Zachmann provides a map) raises doubts within the Kremlin about how determined the EU will actually be. Very interesting point of view on the current Ukranian crisis. – Ricardo Aceves 

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